Originally Published 2014-04-28 04:15:25 Published on Apr 28, 2014
This year, India's and China's crude oil imports from Iran has risen sharply - up by 43% year-on-year basis and 36% year-on-year basis respectively, according to a Reuters report. World's oil giant companies have also shown interest to return to Iran. Do these indicate that Iran has turned the bend and worst phase of sanctions is over?
Iran turns the bend?
Amidst Indian media's obsession of the elections, a small but significant news- report of the Reuters, that Iran's oil exports to India have grown by two fold in the last one year, has gone unnoticed by the media. According to Reuters, Iran exported 387,000 barrels per day (bpd) of crude oil to India in this period. In March 2013, India imported 187,000 bpd of crude oil from Iran, which grew by 117% in the same period this year. India's oil imports in March indicate a 45% increase against that of February, which was 260,000 bpd. Reuters added that India's average oil imports from Iran in the first 3 months of 2014 amounted to 358,000 bpd, up by 43% year-on-year basis.

Similarly, China's crude oil imports from Iran in the first 3 months of 2014 saw an increase of 36% year-on-year basis. China's oil imports from Iran in the first quarter of this year were at 557,605 bpd.

The figures mark a continuing rise in oil exports from Iran, in the light of November 2013 Geneva accord between Iran and P5+1.

Now, do these figures indicate that Iran has turned the bend and worst phase of sanctions is over? Well, there is more good news for Iran.

The oil giants, including Spain's Rapsol, Russia's Lukoil, France's Total and Italy's ENI, have shown interest in returning to Iran following the Geneva accord.

What exactly has changed for Iran, since the Nov 2013 Geneva accord? Well, for starters, on 1st April this year, the US State Department announced that it had authorised release of $450 million, its first installment of the assets frozen by the US Treasury. Iran has also received $2.5 billion from Japan for its oil exports and one payment from South Korea. So, if Japan and South Korea have paid Iran in hard currency, India too appears to have resolved its payments problem with Iran, the one issue that weighed heavily on the relationship, despite many alternative routes that were jointly explored.

The West, as per the Geneva accord, promised Iran that it would release $4.2 billion in revenues long frozen, in 8 installments over the January to July period. Considering that the first installment has been released only in April, it seems unlikely that Iran will get all its remaining installments before the end of July.

Nevertheless, it's a good start. But before this came a detailed report from the IAEA assuring the world that Iran has been by and large true to its commitment made in November 2013 at Geneva.

The IAEA in its report of February 2014 stated that Iran has implemented 6 initial practical measures agreed with the Agency in November 2013 and both parties have agreed that Iran will implement 7 more practical measures by 15th May. Key assurances of the IAEA report are:

    a.  No more enrichment of Uranium is going on at the Pilot Fuel Enrichment Plant (PEFP) at Natanz or at the Fordow Fuel Enrichment Plant (FFEP).

    b.  The amount of high enriched uranium, enriched up to 20% is 160.6kg. A proportion of this is being down-blended and the remainder is converted to Uranium Oxide.

    c.  The amount of low enriched uranium, enriched up to 5% is 7609 kg and its rate of production remains as indicated in previous IAEA reports. No additional centrifuges (IR-2m or IR-1) have been installed at any of the fuel enrichment plants.

    d.  Iran has ceased production of Uranium enrichment above 5%.

It is these assurances from the IAEA that led to unfreezing of Iranian funds by the US Treasury and enabled Japan and South Korea to release their payments to Iran. On the much suspected Heavy water reactor at Arak, Iranian Foreign Minister Ali Akbar Salehi has said that Tehran offered to re-design the core of the reactor to reduce plutonium output to 1/5th of its output capacity. He added that "we are studying changing the fuel cycle from natural to enriched uranium to between 4 to 5%. The other side has been informed of our plan and they welcomed the idea, as it removes their concern over plutonium output." A senior Iranian legislator further elaborated on the plan by stating that Iran was considering a change in the number of fuel rods and adding a bit of enriched uranium to the reactor's fuel as possible options.

Yet, the deal is not all stitched up and ready to be wrapped in a gift box. The next round of talks between 5th and 9th May in New York will explore further ground.

Meanwhile, the Republican led US Congress, that is out to spike the deal, has kicked up a row over Iran's nomination of its diplomat Hamid Abu Talebi as its Permanent Representative to the UN. The Congress passed a bill asking the State Department not to issue a visa for the diplomat over his alleged role in the hostage crisis of US diplomats in Tehran in 1979. Though the diplomat explained that his role was limited to that of providing translation to the negotiators, his pleading was of no avail to the Congress. President Obama in his characteristic style said that he would treat the legislation as a mere advisory, out of concern that it could interfere with his discretion to receive Ambassadors.

In a surprising twist to this controversy, a senior Iranian General (Gen. Mohd. Bagherzaded) has urged the Iranian Foreign Minister to name a new envoy to the UN. He is quoted as saying that Abu Talebi should remain close to his mother because the family lost two sons in the 1980-88 Iraq war. Iranian Generals are not known to speak out of turn. This could well be an orchestrated move to replace the Ambassador. The fact that President Rouhani, who has already reshuffled the Iranian Nuclear Agency to rid of all the loyalists of the former President, may well heed such a compassionate appeal and assuage an old mother. He has been sensitive to Iran's critics which is indeed a sign that the country may well turn the bend soon.

(The writer is a Visiting Distinguished Fellow at Observer Research Foundation, Delhi)

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Anjali Birla

Anjali Birla

Anjali Birla is an Indian Civil Services Officer(Batch 2020) working in the Ministry of Railways and has done her graduation in Political Science from Delhi ...

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